Consumers respond well to rising house prices

The latest ANZ-Roy Morgan index has shown Australian consumer confidence remains steady in the current environment.

The data shows consumer confidence remained at 113.5, which is 11 per cent higher than one year ago, reflecting a more positive response to this year’s federal Budget.

“While it is a positive sign that consumer confidence has largely maintained the post-Budget bounce, the question is whether further momentum can build in coming weeks or whether the bounce will be retraced,” ANZ chief economist Warren Hogan said.

“Solid growth in house prices continues to be supportive for confidence but household fundamentals outside of housing remain weak amid low wages growth, a soft labour market, and high household debt.

“How consumers reconcile the conflicting forces of strong house price gains and weak income growth will likely be a key determinant of confidence going forward.”

The largest gains on the index in response to the Budget have been in expectations regarding the economic outlook for the next year and for the next five years.

These sub-indices have risen by a cumulative 5.7 percentage points and 8.6 points respectively over the past four weeks; however, they remain at subdued levels compared with previous years.

The category that includes the question about whether now is the "time to buy a major household item" saw the smallest gain of all the sub-indices over the past four weeks.